Trump Drops Hormuz Protection Fee Saying Gulf States Will Invest in US
The United States is resuming its blockade of shipping related to Iran today, July 14, but in a reversal of course, Donald Trump now says the Gulf States will pay for protection by investing in the United States. While still asserting “it’s not fair” that the United States is protecting the Strait for the entire world, he announced after calls from Gulf States that he would replace the 20 percent “reimbursement fee” with investment deals.
Trump appeared to surprise everyone on Monday when he announced in a social media posting, and to the media in the Oval Office, that the U.S. would require a 20 percent reimbursement fee as compensation for providing security. He announced the U.S. would become the “Guardian of the Hormuz Strait.”
His comments were immediately met with commendation, and questions about a reversal of position after Trump, as well as Secretary of State Marco Rubio and Treasury Secretary Scott Bessent, in the past, said fees were wrong. When pressed by the media about how the fees would work and who would pay, Trump responded that the Gulf States are rich.
The global shipping community also openly rejected the proposed fees, citing international law. Hapag-Lloyd made a public statement calling the fees “fundamentally wrong,” while shipping groups ranging from BIMCO to the European Community of Shipowners’ Association and others also rejected the idea in statements to CNBC.
The International Maritime Organization has also repeatedly rejected fees. Even the Iranians used it as a propoganda tools. Iranian Foreign Minister Abbas Araghchi said 20 percent was too much and that Iran would be fair with its fees.
The Omani government, a strong ally of the United States, also issued a formal statement. “The Sultanate of Oman continues its transparent and neutral cooperation with all parties to restore freedom of navigation in the Strait, fully in line with international law,” they wrote, calling on all parties to respect international law.
“Based on highly productive conversations with Middle East leadership, I have decided to replace the 20 percent United States Reimbursement Fee with Trade and Investment Deals that the various Gulf States will be making into the United States. Those investments will be MASSIVE but, at the same time, extraordinarily good for them, and their future,” Trump wrote today on social media.
Trump continues to assert, “Oil is flowing like never before.” He wrote that the Strait is open to all shipping except Iran. He says ships were moving through the Strait.
Data, however, continues to show a strong decline in transits. Kpler said there were just 10 verified crossings on July 13, “marking a further slowdown.” It reported crossings were down by six versus a day earlier and that 9 of the 10 crossings were on the Iranian route.
Windward AI reported that only five vessels made the crossing overnight. It was up by two from the day before, but it said one of the five was a tanker loaded with Iranian oil repositioning deeper into the Gulf.
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Other tankers appeared to be rushing to make their exit before the U.S. blockade resumes. TankerTrackers.com spotted one tanker carrying Iranian oil moving at between 14 and 16 knots.
Global oil markets also remained jittery after Iran attacked three more oil and gas tankers overnight. The price of oil is up more than 11 percent in the past five days, with the benchmark briefly exceeding $80 a barrel on Tuesday. Traders continue to watch as the fluid situation continues to evolve.
